Behind the Dismal Jobs Numbers: The ‘New’ Economy Takes Shape
April 6, 2013 - 6:33 am
It is amazing just how wrong economists were in their predictions for the number of jobs that were to be created in March. The “consensus” figure was 200,000 — a far cry from the actual number created which was 88,000. Totally “unexpected,” as usual.
In one way, you can’t blame them. After a better than average gain in February of 236,000 (revised upward this month to 268,000), along with some positive numbers in housing and consumer spending, there were no doubt many analysts who began breathing a sigh of relief and believing that the long-awaited jobs recovery was upon us.
According to the New York Times, the experts didn’t account for a few realities that are beginning to shape our “new” economy:
“It’s important to look at the types of jobs that are being created because those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery,” said Sarah Bloom Raskin, a member of the Federal Reserve Board, in a recent speech. [...]
Ms. Raskin also expressed concern about temporary-help jobs, which account for a growing share of total employment.
Usually an increase in temp hiring is considered a good thing, at least at the start of a recovery, since it indicates that employers are thinking about taking on permanent workers. So far, though, employers seem to be sticking with those temporary contracts.
“Temporary help is rapidly approaching a new record,” said Diane Swonk, chief economist at Mesirow Financial, who noted that there was also a rapid increase in temp hiring during the boom years of the ‘90s. “That of course means more flexibility for employers, and less job security for workers.”
Perhaps most distressingly, millions of workers who want full-time work still can find only part-time work, and their missing work hours do not count toward the official unemployment rate.
Nearly 10% of the workforce is what the BLS calls “employed part-time for economic reasons.” That is to say, either their hours were cut or they were forced into part-time work because they couldn’t find full-time employment. According to Gallup, the percentage of part-time workers who want full time work but can’t find any is the same as it was in March, 2012. There are about 3 million temporary workers who also are not counted as unemployed.
With the labor participation rate the lowest it’s been since 1979, and another 200,000+ workers that were added to the category of being too discouraged to look for work, nearly 90 million Americans are now out of the work force. The major culprits in March are being identified as the payroll tax “increase” (actually, the payroll tax cut was never meant to be permanent) and, of course, Obamacare.
The full effects on jobs of Obamacare have not been felt yet. There will certainly be millions of more workers losing full-time jobs as their employers seek to bring their full-time workforce under 50 so that they can avoid the worst of Obamacare’s mandates and taxes. Some employees will be shifted to part-time work — especially in the retail and restaurant industries. Others will simply see their jobs disappear.
So what kind of economy appears likely to emerge from the ruins of The Great Recession? It isn’t just Obamacare that is reshaping our economy. Obama administration policies and regulations that make it more difficult to start a business mean that there will be fewer entrepreneurs creating new products that require good workers to make them. Employers will seek to hire more temporary help during busy periods rather than permanently expand their workforce. The number of full-time workers in some industries will drop dramatically as companies adjust to an economy of sluggish growth, high taxes, and a clinging uncertainty about the future by either not filling open positions or hiring part time help.
Without regulatory and tax reform — and the repeal of Obamacare — the post-recession environment is going to be a lot more unfriendly to both business and labor. But at least we’ll all be equal in our misery thanks to the president’s redistributionist policies and a disrespect for those who achieve, or wish to achieve, success.